Keep a Wary Eye on Netflix

The weekly chart shows the stock moving in a wide horizontal channel for about a year before breaking resistance in April, and rallying to just above the pattern price target projection. It’s oversold as reflected in the reading on the relative strength index (RSI) but money flow is still very positive, as reflected by the volume-weighted money flow index (MFI). Of note on this chart, are the two high wick candles that formed over the last two periods; they reflect an in ability to sustain higher price.

On the daily chart a large bearish engulfing candle formed in the last session, encompassing the entire range of the previous three trading days. The RSI is breaking below its overbought level, the MFI is headed down towards its centerline, and Chaikin money flow has dropped below its 21 period signal line, but is still in positive territory. It’s hard to say anything negative about this stock, which is a trader favorite and been on a tear since the beginning of the year, but the price action and these technical indicators bear monitoring.